Courting Failure by Lynn M. LoPucki

Author:Lynn M. LoPucki
Language: eng
Format: epub
Publisher: The University of Michigan Press
Published: 2018-05-15T00:00:00+00:00

Page 171 →

Source: Data from Lynn M. LoPucki’s Bankruptcy Research Database.

Note: Delaware court cases are shown in bold.

Page 172 →The court set September 26 as the last day for the submission of competing offers. The court did not meet Derby’s deadline for approving the sale, but luckily, there still was a business to sell when the court approved the sale on October 2, 2001. The sale was completed on October 29, 2001.97 Derby’s estate received $23 million of the $40 million purchase price. The buyer paid the remaining $17 million by assuming secured debt.

Based solely on the record, Derby’s sale looks suspicious. The Finden-Crofts management took nearly eight months to put Derby into bankruptcy and then insisted that the court approve a sale to themselves in just five weeks. If it took Finden-Crofts—the former owner of Derby—five months to evaluate the company from the inside and prepare a bid, how were competing bidders supposed to do it from the outside in five weeks? The trade shows and the approaching Christmas selling season were the “emergency” used Page 173 →to justify the hurried schedule, but that emergency could hardly have come as a surprise to anyone. As the United States Trustee put it in an objection to the sale:

[T]he rushed nature of this sale appears to be a creation of the Buyer’s own doing, who, it can be assumed, as Chief Executive Officer of the Debtor, played some role in the decision to delay the filing of Chapter 11 until shortly before these events. Indeed, it is arguable that the Buyer’s actions caused the quickly deteriorating conditions that Debtor now alleges require a quick sale.98

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